SCA Hygiene Products Aktiebolag v. First Quality Baby Products LLC

ON WRIT
OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
FEDERAL CIRCUIT

In
2003, petitioners (collectively, SCA) notified respondents
(collectively, First Quality) that their adult incontinence
products infringed an SCA patent. First Quality responded
that its own patent antedated SCAs patent and made it
invalid. In 2004, SCA sought reexamination of its patent in
light of First Quality's patent, and in 2007, the
Patent and Trademark Office confirmed the SCA patent's
validity. SCA sued First Quality for patent infringement in
2010. The District Court granted summary judgment to First
Quality on the grounds of equitable estoppel and laches.
While SCAs appeal was pending, this Court held that laches
could not preclude a claim for damages incurred within the
Copyright Act's 3-year limitations period. Petrella
v. Metro-Goldwyn-Mayer, Inc., 572 U.S. __, __. A
Federal Circuit panel nevertheless affirmed the District
Court's laches holding based on Circuit precedent,
which permitted laches to be asserted against a claim for
damages incurred within the Patent Act's 6-year
limitations period, 35 U.S.C. §286. The en banc court
reheard the case in light of Petrella and
reaffirmed the original panel's laches holding.

Held:
Laches cannot be invoked as a defense against a claim for
damages brought within §286's 6-year limitations
period. Pp. 3-16.

(a) Petrella's holding rested on both
separation-of-powers principles and the traditional role of
laches in equity. A statute of limitations reflects a
congressional decision that timeliness is better judged by a
hard and fast rule instead of a case-specific judicial
determination. Applying laches within a limitations period
specified by Congress would give judges a
"legislation-overriding" role that exceeds the
Judiciary's power. 572 U.S., at. Moreover, applying
laches within a limitations period would clash with the
gap-filling purpose for which the defense developed in the
equity courts. Pp. 3-5.

(b) Petrella's reasoning easily fits §286.
There, the Court found in the Copyright Act's language a
congressional judgment that a claim filed within three years
of accrual cannot be dismissed on timeliness grounds. 572
U.S., at __. By that same logic, §286 of the Patent Act
represents Congress's judgment that a patentee may
recover damages for any infringement committed within six
years of the filing of the claim.

First Quality contends that this case differs from
Petrella because a true statute of limitations runs
forward from the date a cause of action accrues, whereas
§286's limitations period runs backward from the
filing of the complaint. However, Petrella
repeatedly characterized the Copyright Act's limitations
period as running backward from the date the suit was filed.
First Quality also contends that a true statute of
limitations begins to run when the plaintiff discovers a
cause of action, which is not the case with §286's
limitations period, but ordinarily, a statute of limitations
begins to run on the date that the claim accrues, not when
the cause of action is discovered. Pp. 5- 8.

(c) The Federal Circuit based its decision on the idea that
§282 of the Patent Act, which provides for
"defenses in any action involving the validity or
infringement of a patent, " creates an exception to
§286 by codifying laches as such a defense, and First
Quality argues that laches is a defense within
§282(b)(1) based on "unenforceability." Even
assuming that §282(b)(1) incorporates a laches defense
of some dimension, it does not necessarily follow
that the defense may be invoked to bar a claim for damages
incurred within the period set out in §286. Indeed, it
would be exceedingly unusual, if not unprecedented, if
Congress chose to include in the Patent Act both a statute of
limitations for damages and a laches provision applicable to
a damages claim. Neither the Federal Circuit, nor any party,
has identified a single federal statute that provides such
dual protection against untimely claims. Pp. 8-9.

(d) The Federal Circuit and First Quality rely on lower court
patent cases decided before the 1952 Patent Act to argue that
§282 codified a pre-1952 practice of permitting laches
to be asserted against damages claims. But the most prominent
feature of the relevant legal landscape at that time was the
well-established rule that laches cannot be invoked to bar a
claim for damages incurred within a limitations period
specified by Congress. In light of this rule, which
Petrella confirmed and restated, 572 U.S., at __,
nothing less than a broad and unambiguous consensus of lower
court decisions could support the inference that
§282(b)(1) codifies a very different patent-law-specific
rule. Pp. 9-10.

(e) The Federal Circuit and First Quality rely on three types
of cases: (1) pre-1938 equity cases; (2) pre-1938 claims at
law; and (3) cases decided after the merger of law and equity
in 1938. None of these establishes a broad, unambiguous
consensus in favor of applying laches to damages claims in
the patent context.

Many of the pre-1938 equity cases do not even reveal whether
the plaintiff asked for damages, and of the cases in which
damages were sought, many merely suggest in dicta that laches
might limit damages. The handful of cases that apply laches
against a damages claim are too few to establish a settled,
national consensus. In any event, the most that can possibly
be gathered from a pre-1938 equity case is that laches could
defeat a damages claim in an equity court, not that
the defense could entirely prevent a patentee from recovering
damages.

Similarly, even if all three pre-1938 cases at law cited by
First Quality squarely held that laches could be applied to a
damages claim within the limitations period, that number
would be insufficient to overcome the presumption that
Congress legislates against the background of general
common-law principles. First Quality argues that the small
number of cases at law should not count against its position
because there were few patent cases brought at law after
1870, but it is First Quality's burden to show that
Congress departed from the traditional common-law rule.

As for the post-1938 patent case law, there is scant evidence
supporting First Quality's claim that courts continued to
apply laches to damages claims after the merger of law and
equity. Only two Courts of Appeals held that laches could bar
a damages claim, and that does not constitute a settled,
uniform practice of applying laches to damages claims. Pp.
11-15.

(f) First Quality's additional arguments are unconvincing
and do not require extended discussion. It points to
post-1952 Court of Appeals decisions holding that laches can
be invoked as a defense against a damages claim, but nothing
that Congress has done since 1952 has altered §282's
meaning. As for the various policy arguments presented here,
this Court cannot overrule Congress's judgment based on
its own policy views. Pp. 15-16.

We
return to a subject that we addressed in Petrella v.
Metro-Goldwyn-Mayer, Inc., 572 U.S. __ (2014): the
relationship between the equitable defense of laches and
claims for damages that are brought within the time allowed
by a statute of limitations. In Petrella, we held
that laches cannot preclude a claim for damages incurred
within the Copyright Act's 3-year limitations period.
Id., at __ (slip op., at 1). "[L]aches, "
we explained, "cannot be invoked to bar legal
relief" "[i]n the face of a statute of limitations
enacted by Congress." Id., at __ (slip op., at
13). The question in this case is whether Petrellds
reasoning applies to a similar provision of the Patent Act,
35 U.S.C. §286. We hold that it does.

I

Petitioners
SCA Hygiene Products Tiebold and SCA Personal Care, Inc.
(collectively, SCA), manufacture and sell adult incontinence
products. In October 2003, SCA sent a letter to respondents
(collectively, First Quality), alleging that First Quality
was making and selling products that infringed SCA's
rights under U.S. Patent No. 6, 375, 646 Bl ('646
patent). App. 54a. First Quality responded that one of
its patents- U.S. Patent No. 5, 415, 649 (Watanabe
patent)-antedated the '646 patent and revealed "the
same diaper construction." Id., at 53a. As a
result, First Quality maintained, the '646 patent was
invalid and could not support an infringement claim.
Ibid. SCA sent First Quality no further
correspondence regarding the '646 patent, and First
Quality proceeded to develop and market its products.

In July
2004, without notifying First Quality, SCA asked the Patent
and Trademark Office (PTO) to initiate a reexamination
proceeding to determine whether the '646 patent was valid
in light of the Watanabe patent. Id., at 49a-51a.
Three years later, in March 2007, the PTO issued a
certificate confirming the validity of the '646 patent.

In
August 2010, SCA filed this patent infringement action
against First Quality. First Quality moved for summary
judgment based on laches and equitable estoppel, and the
District Court granted that motion on both grounds. 2013 WL
3776173, *12 (WD Ky., July 16, 2013).

The
Federal Circuit then reheard the case en banc in order to
reconsider Aukerman in light of Petrella.
But in a 6-to-5 decision, the en banc court reaffirmed
Aukerman's holding that laches can be asserted
to defeat a claim for damages incurred within the 6-year
period set out in the Patent Act. As it had in
Aukerman, the en banc court concluded that Congress,
in enacting the Patent Act, had "codified a laches
defense" that "barred recovery of legal
remedies." 807 F.3d 1311, 1323-1329 (2015). Judge
Hughes, joined by four other judges, dissented.[2]Id., at
1337-1342 (opinion concurring in part and dissenting in
part). We granted certiorari. 578 U.S. __ (2016).

II

Laches
is "a defense developed by courts of equity" to
protect defendants against "unreasonable, prejudicial
delay in commencing suit." Petrella, supra, at
__, __ (slip op., at 1, 12). See also 1 D. Dobbs, Law of
Remedies §2.3(5), p. 89 (2d ed. 1993) (Dobbs) ("The
equitable doctrine of laches bars the plaintiff whose
unreasonable delay in prosecuting a claim or protecting a
right has worked a prejudice to the defendant"). Before
the separate systems of law and equity were merged in 1938,
the ordinary rule was that laches was available only in
equity courts.[3] See County of Oneida v. Oneida Indian
Nation of N. Y.,470 U.S. 226, 244, n. 16 (1985). This
case turns on the application of the defense to a claim for
damages, a quintessential legal remedy. We discussed this
subject at length in Petrella.

Petrella
arose out of a copyright dispute relating to the film Raging
Bull. 572 U.S., at __ (slip op., at 8). The Copyright
Act's statute of limitations requires a copyright holder
claiming infringement to file suit "within three years
after the claim accrued." 17 U.S.C. §507(b). In
Petrella, the plaintiff sought relief for alleged
acts of infringement that accrued within that 3-year period,
but the lower courts nevertheless held that laches barred her
claims. See 695 F.3d 946 (CA9 2012). We reversed, holding
that laches cannot defeat a damages claim brought within the
period prescribed by the Copyright Act's statute of
limitations. Petrella, 572 U.S., at __ - __
(slip op., at 11-14). And in so holding, we spoke in broad
terms. See id., at __ (slip op., at 13) ("[I]n
the face of a statute of limitations enacted by Congress,
laches cannot be invoked to bar legal relief").

Petrella's
holding rested on both separation-of-powers principles and
the traditional role of laches in equity. Laches provides a
shield against untimely claims, id., at __ (slip
op., at 19), and statutes of limitations serve a similar
function. When Congress enacts a statute of limitations, it
speaks directly to the issue of timeliness and provides a
rule for determining whether a claim is timely enough to
permit relief. Id., at __ (slip op., at 11). The
enactment of a statute of limitations necessarily reflects a
congressional decision that the timeliness of covered claims
is better judged on the basis of a generally hard and fast
rule rather than the sort of case-specific judicial
determination that occurs when a laches defense is asserted.
Therefore, applying laches within a limitations period
specified by Congress would give judges a
"legislation-overriding" role that is beyond the
Judiciary's power. Id., at __ (slip op., at 14).
As we stressed in Petrella, "courts are not at
liberty to jettison Congress' judgment on the timeliness
of suit." Id., at __ (slip op., at 1).

Applying
laches within the limitations period would also clash with
the purpose for which the defense developed in the equity
courts. As Petrella recounted, the "principal
application" of laches "was, and remains, to claims
of an equitable cast for which the Legislature has provided
no fixed time limitation." Id., at __ (slip
op., at 12); see also R. Weaver, E. Shoben, & M. Kelly,
Principles of Remedies Law 21 (2d ed. 2011); 1 Dobbs
§2.4(4), at 104; 1 J. Story, Commentaries on Equity
Jurisprudence §55(a), p. 73 (2d ed. 1839). Laches is a
gap-filling doctrine, and where there is a statute of
limitations, there is no gap to fill.[4]Petrella, supra, at
__ (slip op., at 14); see also 1 Dobbs §2.4(4), at 108
("[I]f the plaintiff has done only what she is permitted
to do by statute, and has not misled the defendant [so as to
trigger equitable estoppel], the basis for barring the
plaintiff seems to have disappeared").

With
Petrella's principles in mind, we turn to the
present dispute.

III

A

Although
the relevant statutory provisions in Petrella and
this case are worded differently, Petrella's
reasoning easily fits the provision at issue here. As noted,
the statute in Petrella precludes a civil action for
copyright infringement "unless it is commenced within
three years after the claim accrued." 17 U.S.C.
§507(b). We saw in this language a congressional
judgment that a claim filed within three years of accrual
cannot be dismissed on timeliness grounds. 572 U.S., at __
(slip op., at 11); see also id., at __-__
(slip op., at 14-15).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
same reasoning applies in this case. Section 286 of the
Patent Act provides: "Except as otherwise provided by
law, no recovery shall be had for any infringement committed
more than six years prior to the filing of the complaint or
counterclaim for infringement in the action." By the
logic of Petrella, we infer that this provision
represents a judgment by Congress that a patentee ...

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